Breaking Down The Best Budgeting Techniques

Which budgeting style is the right one for you? In this article, we'll break down 8 of the best methods to help you find out.

When it comes to managing our money, budgeting is critical. However, not all budgeting methods are suitable for everyone. And so, it’s important to figure out which method suits your unique set of needs the best.

The fact is, there’s a wide array of effective budgeting methods to choose from, and they vary greatly. So first things first, assess your goals and note how you prefer to keep track of your finances.

Here are the most financially savvy budgeting methods around, and you definitely need to know about them.

The 50/30/20 Method

Have you heard of the 50/30/20 budgeting method? Ask yourself these questions: how much you should be spending on necessities? How about the stuff you want? Lastly, what portion of your paycheck should go towards your financial future?

With a 50/30/20 budget, you’ll divvy up your money so that 50% of what you make covers essentials, 30% goes towards things you enjoy, and 20% is put aside for meeting financial goals. With this method, you don’t need to put a cap on what you’re spending on groceries or outings with friends.

You just need to make sure your spending stays within the percentage brackets.

dollars,pen, and notebook with text written - 50 30 20 RULE

Also, it’s okay to shift the percentages a little to suit your needs. For instance, you could spend 60% on essentials, put back 20%, and spend 20% on the things you enjoy.

The 50/30/20 method is a great option for people who need a little guidance when it comes to balancing their budget, saving, investing, and repaying debt. If you tend to overspend in the wrong areas, this method will help you cut back where you need to while not giving up the things you want.

The Zero-Based Budget

If you prefer a more concrete plan that tells you where each dollar is going, the zero-based budget might be for you. With this method, you’ll specifically and strategically decide what to do with every dollar you make.

Your goal will be to make sure your monthly income minus monthly expenses equals zero. At the end of the month, there should be no money left over. And you should never be spending more than you bring in.

Here’s how to do it.

Zero-Based Budgeting on a paper and glasses

First things first, analyze your bank statements, credit card statements, and receipts that you’ve collected over the past few months. This will help you get a sense of how much you actually spend in each budget category. Once you’ve done that, set a spending limit to each of the budget categories. Tweak the numbers until the amount you have going out equals the amount you have coming in.

For those that want to be in full control and intentional with their money, the zero-based budget is a perfect fit. People who use this method know their finances inside and out, and it can be helpful for identifying where financial issues lie.

Bare-Bones Budgeting

Bare-bones budgeting works a lot like it sounds. With this method, you will cover only the expenses that you deem absolutely necessary. You’ll save everything that’s leftover.

white piggy bank with curly tail on yellow background

This one’s helpful for budgeters who aim to significantly build their savings — or pay down large chunks of debt.

If you need a spending reset, this might be the budgeting technique for you. It’s also ideal for those trying to manage money on a low income or for those with a lot of bills to pay.

60% Solution

Obviously, we must prioritize the essentials in our lives. But that doesn’t mean we should completely dismiss those things that bring value to our lives that aren’t considered “essentials,” does it?  If this is how you think, the 60% solution might be perfect for you. It gives value to that kind of spending.

budgeting on a laptop

At first glance, it’s similar to the 50/30/20 method, but it comes with its own set of rules. With the 60% solution, 60% of your income goes towards expenses you’re committed to, including essentials and those things that are most important to you, like your weekly yoga class or your child’s piano lessons. You put the remaining 40% into savings or put some of it toward discretionary spending or “fun money.”

So is the 60% solution right for you? If you want to prioritize non-essential expenses into the budget, the answer is likely yes. It allows flexibility for those who don’t want to track every dollar, but it still gives enough guidance to stay on top of your budget.

Paycheck Budgeting

While most budgets cover a whole month’s worth of expenses and spending, paycheck budgeting is when you allot separate budgets to cover individual pay periods.

Here’s how it works: figure out how you’ll spend each paycheck, covering bills, miscellaneous expenses, and all other costs until your next paycheck arrives. This method will help you learn how much money you have between paychecks.

pay day circled on a calendar

If you have multiple bills that are all due around the same time, this may not be the method for you. If you’re in this situation but think that it might be worth a try, you might want to see if you can spread some of those payment dates around a bit first.

For those living paycheck-to-paycheck, this is a great money management system. It’s also a good system for those who want to put their energy toward how they’ll spend their money once it’s in their hand as opposed to making a concrete plan at the start of the month.

The Calendar Budget

We’ve all used a calendar at some time or another for keeping track of upcoming events, appointments, etc. Those who abide by this method use it for important financial dates as well.

With a calendar budget, the goal is to stay on top of every bill and all anticipated spending.

calculator, coins, and calendar

With whatever calendar you choose to use, you’ll need to mark down your paydays (including what you’re getting paid) and all upcoming expenses (bills, doctor’s visits, etc). But with this method, you don’t need to mark everything in advance.

With variable spending, you can make notes as spending occurs. For instance, if you go out to eat with friends or you fill up your gas tank, you can mark it after the fact.

It’s also advised that you keep a running daily balance with this one. This way, you’ll know where your finances stand at all times. You’ll need to get in the habit of marking your budgeting calendar every day, but it shouldn’t take but a few minutes.

This technique is ideal for those who want to use an easy budgeting system that they’re already familiar with. It’s also useful for those on the forgetful side who have a tendency to miss due dates or not prepare for events that are going to cost money, like your spouse’s birthday.

The Half Payment Method

Nobody likes to spend the majority of their income on bills at the beginning of the month. The half payment method gives you the opportunity to spread those expenses around a bit.

With the half payment method, you’ll need to set aside half the cost of monthly bills with just one paycheck. The next check will cover the remaining half. By spreading the cost of your fixed expenses evenly between paychecks, you should be able to reduce money stress over the course of the month.

woman paying bills and working on laptop

Ideally, you’ll already have enough put back to cover a half-month’s worth of your expenses before trying this budgeting practice. If not, don’t rush into this one. Transition into this method gradually, bill by bill.

This budgeting method primarily focuses on dividing fixed expenses. What’s leftover should go towards groceries, gas, entertainment, and whatever else comes up that you might need a little extra for.

This method is useful for people who are paid on a biweekly or semimonthly basis. If you find yourself struggling with an uneven distribution of expenses throughout each month, give the half payment method a try.


Kakeibo is a century-old money management technique that originated in Japan. And it’s never gone out of style. Invented by Hani Motoko, Japan’s first female journalist, Kakeibo (which translates to “household financial ledger”) incorporates mindfulness, journaling, and minimalism into budgeting.

At the start of each month, you’ll reflect on how much money you have at that moment, how much you want to save, how much you’re actually spending, and how you’d like to improve your financial situation. Once you’ve set aside something for your savings, you’ll continuously track all expenses in your journal.

stacking rocks as a harmony practice

Spending should be divided into four budget categories: needs, wants, “a cultural purchase“, and unexpected/extra expenses. As you spend monthly, make a note of why you made each purchase and how it made you feel.

At the end of the month, total up your spending and take a moment to reflect on how you managed your money. Think about whether or not your spending is allowing you to reach your financial goals.

For those looking to add an element of mindfulness into their daily financial lives, kakeibo could be right for you. If you are reflective and prefer seeing things written out in a more personal way instead of a spreadsheet, give it a try. The idea is to simplify your budget, not overcomplicate it.

Latest News